“People entering our profession want change—they don’t want the old model”

HLB Ireland has completed 12 acquisitions in seven years and the ambitious firm has further plans for growth in a “fragmented” market, says Mark Butler

Expanding advisory and accounting firm HLB Ireland has completed no fewer than 12 acquisitions in the last seven years, with more to follow this year.

Its latest deal to acquire Dublin practice Leahy O’Riordan Chartered Accountants in April, brings HLB Ireland’s headcount to 180.

Fee revenue has doubled over the past 12 months and is set to double again in the two years ahead, according to Managing Partner Mark Butler, bringing the goal of becoming one of Ireland’s top 10 professional services firms well within reach.

These acquisitions are more than just about increased scale. “We’re in this for the long haul”, Butler says, “We’re very much focused on building one integrated professional services business managed and controlled in Ireland, rather than a collection of businesses running independently of each other”.

The firm’s business model is built around three strategic pillars: people; client experience; and innovation.

“People are central to all of our integrations”, Butler explains, “We want new partners and teams to join us for two reasons: for career growth; and to provide continuity for their clients because, in Ireland, you deal with the people you know, like and trust. That’s what it’s all about”.

Butler joined HLB Ireland—then Sheehan Quinn & Co.—in 2000, having studied accounting and IT and trained with a small firm.

After leaving Sheehan Quinn & Co. to work briefly in the regulatory sphere, he was invited to rejoin the firm in 2003 with a view to becoming a partner within five years.

“We did it the old-fashioned way”, he recalls, “We had a lot of private owner-managed business clients that had been with the firm since the seventies, and it was my job to build relationships with them over that five-year period.

“I think that experience has stood to us as a firm right up to this day. When we acquire other firms, it’s based on the understanding we have cultivated that our profession is about people and the relationships and trust you build with them. That takes time—it doesn’t happen overnight— and it remains at the core of our ethos”.

HLB International: the global impact

In 2012, the firm joined HLB International, a global network ranked ninth worldwide by fee revenue. “HLB International was formed in 1969 in order to help international firms make global connections in order to service their clients. ”, Butler says.

“We joined because we had a lot of clients who needed services internationally. They might need an audit in Belgium or support for a property purchase in Portugal, for example, and we knew that, if we didn’t join an international network, they would end up going to larger firms to get that service”.

The decision was “transformational” for the firm, Butler says—and not just from the perspective of servicing existing clients.

“We’ve been able to win a lot of new business because any business that comes into Ireland through the HLB network comes to us”, says Butler.

The move has also profoundly impacted the scope of the firm’s growth strategy. “Our focus had been on organic growth, but I could see globally that to grow a practice, you need inorganic growth as well”, explains Butler.

“You can only do so much with your personal network. You need to broaden that network through mergers and acquisitions in order to grow a long-term sustainable practice, which is our goal”.

Expansion and acquisition trail

HLB Ireland hit the acquisition trail in earnest in 2019. “Our first merger was with Conlan Crotty Murray, a like-minded firm with lots of mid-tier clients, including family-owned businesses and private clients”, Butler says.

In addition to growing market share, the firm’s growth strategy is also about expanding its service offering.

“A lot of smaller practices tend to be very much compliance-led”, Butler says, “By joining together, through mergers and acquisitions, you gain the scale and resources to extend service lines in areas like M&A advisory, tax planning, succession planning and technology.

“Being able to bring these new service lines to the clients of the practices we bring on board means we can sustain and grow those existing relationships. They don’t need to go elsewhere for those services when they need them”.

Technology is another growth area for HLB Ireland which acquired Future Range, the Dublin-based IT managed service business.

“I could see that accountancy firms internationally were starting to invest in technology service lines with a focus on Cybersecurity, we felt this would continue as a significant business risk for our clients and strategically made the decision to acquire and continually build a business with cybersecurity at its core ”, Butler says.

Future Range continues to trade under its own name but is, Butler says, an integral part of the HLB service offering, providing technology, cybersecurity and IT managed services, as well as artificial intelligence (AI) readiness and implementation services.

Sector focus is another priority for HLB Ireland’s Managing Partner. “Having sector specialisms within a practice is becoming more and more important”, Butler says.

“The days of advisory and accounting firms being ‘all things to all people’ are gone and this shift will only continue into the future”.

HLB Ireland has a strong presence in niche sectors, such as healthcare, professionals, agri-food, technology and arts and entertainment.

“Veterinary was the first sector I really focused on. I could see there was consolidation in the sector in the UK, and I thought, if it’s happening there, it’s going to happen here as well.

“We built the expertise in veterinary and now act for, or have acted for, just about all of the corporate players in the veterinary space”.

Cardinal Capital: a new funding model

A change in HLB Ireland’s funding model came about last year when Cardinal Capital, the Dublin-based alternative investment manager, invested in the firm.

“Up until April last year, we were self-funded and all of our acquisitions were funded through traditional bank debt and personal resources”, Butler says.

“Then, it became clear in the consolidation of the market we wouldn’t be able to continue alone on our journey to becoming the number one practice of choice for owner-managed business in Ireland.

If we wanted to continue to grow, we realised we were going to need an equity partner, and Cardinal took a minority investment.

“It is our goal to build a successful all-island advisory business, so it’s important that we maintain control of the business.

“It’s also important to us that the investment in our firm be Irish led; that we are building an Irish business with support from within Ireland”.

So far, the Cardinal Capital partnership has been “very positive” for HLB Ireland, Butler says.

“Of the 12 transactions we’ve done, we have been able to close six in the last 14 months because we had Cardinal Capital as our partner.

“When we meet potential practices or technology businesses, they know we’re serious about a deal because we have that backing. It’s also been very positive from a recruitment perspective, because people understand that there will be opportunities in the firm because of our growth”.

Future trends: AI and consolidation

Butler foresees further consolidation in Ireland’s accountancy sector in the years ahead. “We are just really at the start of it”, he says.

“Our profession is very fragmented with lots of small accounting practices. That’s going to change through ongoing consolidation.

“Also, people entering our profession want change. They don’t want the old model; they want opportunities to work in more exciting and interesting areas of practice, growing their career using technology to provide a better client experience and adding value”.

AI is also set to have an impact. “I look at AI as an opportunity rather than a threat. It is moving at such a fast pace—even in the last six months, the progress has been unbelievable.

“Marketing, business development, HR—building financial models and compliance tasks like preparing engagement letters—are all now done with the assistance of AI.

Due to the fact that we are also a technology business advising in this area we have been able to embrace AI relatively early and have tools and automations rolled out across the practice. It continues to give us time back for Advisory and focusing on client experience. This is a trend which will continue at pace.

Our investment in people and technology will continue hand in hand as they are very much interlinked in building a practice for the future.

For HLB Ireland, meanwhile, Butler sees a bright future in accounting outsourcing services across Irish business which is seeing significant growth.

“We are moving much more towards a client accounting services model, where we will be doing everything finance-related for SME clients”, Butler says.

“The requirement for internal accounting staff ; AI and other technologies will help us deliver the basic functions—payroll, purchase and sales invoices, and so on—with our oversight as accountants.

“We are the trusted business partners, helping our clients run their businesses better with the benefit of faster financial information”.

While he is firmly focused on the future, Butler also has an eye on the past. “We are celebrating 50 years in business this year—it’s an important milestone for us”, he explains.

“We have also recently created The Mentora Group which aligns our current brands by maintaining their individual identities as HLB Ireland and Future Range but within the one group.

“Our differentiator is that, in the mid-tier sector, no one else is able to offer accounting advisory and technology, cybersecurity and AI services all in one firm with the depth and expertise which we have built”.

And Butler has no plans to abandon the acquisition trail. “We’ve still got big ambitions”, he says.

“We are engaged in processes at the moment and hope to close some deals by the end of the year. Our goal is to be an all-island business, and to have a presence in each of the major cities with advisory, accounting and technology services under one roof”.